Peakside exits German asset from ex-Merrill Lynch fund

Peakside Capital, the private equity real estate firm that last year took over the management of Bank of America Merrill Lynch’s European real estate principal investments business, has exited from a residential complex in Germany.

The firm has sold a Berlin appartment complex consisting of 612 residential units to TAG Immobilien AG, a Hamburg-based real estate investment firm. No sale price was divulged but, sources familiar with the deal told PERE it was approximately €24 million.

Peakside completed the exit on behalf of its Peakside Real Estate Fund I, an investment vehicle formerly known as Merrill Lynch European Real Estate Opportunity Fund. The pan-Europe fund, which was launched in 2007, was closed on €261 million of equity. It was one of two vehicles spun out from BoAML as part of the MBO. The other fund was the Bosphorus Real Estate Fund I, which is focused on investments in Turkey.

The German residential complex was originally bought in 2007 from an undisclosed German mortgage bank via the purchase of a non-performing loan, alongside joint venture partner Wertgrund Immobilien AG. Peakside said during its ownership of the property the partners improved its vacancy from 13 percent to below 3 percent while increasing the rent from €4 a square metre to €4.37 a square metre. That helped the asset increase its net operating income to more than 68 percent.

In an announcement on the deal, Peakside said the proceeds of the sale would be used to make new investments for the fund, particularly in Germany and elsewhere in central and eastern Europe. Stefan Aumann, another of the founding partners of Peakside Capital and head of its asset management division said: “We plan to re-deploy the proceeds of the sale into other investments with value creation potential. Through our experienced in-house investment advisory team, we expect to be an active player across a number of European real estate markets with particular focus on Germany and CEE, where we see particular opportunities to deliver value for our investors.”